Google's decision to reverse its censorship of search engine results in China received a warm welcome in Silicon Valley last night.

Human rights campaigners, ­freedom of speech advocates and dotcom ­entrepreneurs all applauded the ­Californian company's decision to stop cooperating with the Chinese government.

The move, which threatens to end the internet giant's business in China after four troubled years, was seen by many as a turning point in the relationship between corporate America and Beijing.

Jonathan Zittrain, professor of ­internet law at Harvard and a prominent ­anti-censorship activist, said he thought Google could wield significant influence in a fight to bring more uncensored ­information to Chinese citizens.

"In a world in which we are so used to public relations massaging of messages, this stands out as a direct declaration. It's amazing," he said. "I think the Chinese are going to say, 'bye-bye Google' – but just think about what happens if Google's engineers set about making information as accessible as possible in China."

Others agreed the company was ­beginning what could be a wider shift in attitudes.

John Battelle, a former managing editor of Wired magazine who covered the rise of Google in his 2005 book The Search, said others could follow.

"In this case, Google is again taking a leadership role, and the company is ­forcing China's hand," he wrote on his blog.

"This is politics at its finest, and it's a very clear statement to China: we're done playing the game your way."

While many threw their support behind Google's decision to stop censoring its search index, others – particularly those with significant business interests in China – were more circumspect.

Most of the company's major rivals – including Microsoft – refused to ­comment on Google's announcement, while Yahoo released a terse statement in which it denounced the hacking attacks that Google said had prompted the decision.

"Yahoo is committed to protecting human rights, privacy and security," said the company.

"We condemn any attempts to infiltrate company networks to obtain user ­information. We stand aligned with Google that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is ­something that we as internet pioneers must all oppose."

Microsoft and Yahoo have been ­criticised in the past for their activities in China, which have included removing websites belonging to dissidents, and the handing over of information which led to the jailing of several outspoken critics of the government.

In 2007, a congressional inquiry ­criticised Yahoo's complicity in the ­imprisonment of Chinese journalist Shi Tao, ­leading to claims that Yahoo's co-founder Jerry Yang – who was born in ­Taiwan – had acted as a "moral pygmy" by bowing to pressure from Beijing.

But while some leading ­technology companies have colluded with the ­Chinese government to silence its political opponents, others have been even more intimately involved in attempts to disrupt and silence dissidents.

At the same time that Google was announcing its decision to lift the ban on certain words and phrases, Cisco Systems – which was instrumental in building the systems used in the Great Firewall of China – announced plans to increase investment in its businesses in the country.

Sarah Lacy, author of the book Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley, and writer for the influential Silicon Valley blog Techcrunch, said Google's decision was a pragmatic example of dotcom realpolitik, pointing out that Google's business was not doing well in China.

"They're taking a bad situation and making something good out of it, both from a human and business point of view," she wrote.

"I'm not saying human rights didn't play into the decision, but this was as much about business."